What is the impact of an “as is” or “waiver of reliance” provision in my contract?

The Texas Supreme Court has limited the enforceability of “as is” and “waiver of reliance” language to exclude situations in which:

  • The buyer was induced to enter into the contract containing that language by a fraudulent representation or concealment of information by the seller; or
  • The seller engaged in conduct that impaired, obstructed, or interfered with the buyer’s inspection of the property being sold.  

The Court indicated that, even absent fraudulent inducement or impairment of inspection, such language still may not be enforceable based on consideration of the totality of the circumstances, including such factors as: 

  • The sophistication of the parties and whether they were represented by counsel;
  • Whether the contract was an arm’s length transaction;
  • The relative bargaining power of the parties and whether the contractual language was freely negotiated; and
  • Whether that language was an important part of the parties’ bargain, not simply added in a “boilerplate” provision. 

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